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The US imposed new sanctions on Iran's oil sector as part of a $95-billion foreign aid package signed by President Biden on April 24. These sanctions aim to curb Iran's growing oil trade with China by targeting Chinese banks involved in transactions with Iranian crude. The sanctions also extend to foreign refineries, vessels, and ports that handle Iranian oil, with violators facing a two-year ban from US ports. This measure requires annual assessments of Iran’s oil exports by the Biden administration. Iran produces about 3 million barrels per day (b/d) and is expected to increase this by 280,000 b/d this year. Most of Iran’s oil exports, estimated at 1.3-1.6 million b/d, go to China, often sold below market prices to small refineries that are difficult to sanction. Analyst Kevin Book estimates that if new sanctions are fully enforced, they could remove 60% of Iranian crude from the market, potentially raising global oil prices by $8.40 per barrel. However, President Biden could use discretionary waivers to prevent price spikes, especially considering the upcoming presidential election.

US Imposes New Iran Oil Sanctions Targeting Exports to China

The US imposed new sanctions on Iran’s oil sector as part of a $95-billion foreign aid package signed by President Biden on April 24. These sanctions aim to curb Iran’s growing oil trade with China by targeting Chinese banks involved in transactions with Iranian crude. The sanctions also extend to foreign refineries, vessels, and ports that handle Iranian oil, with violators facing a two-year ban from US ports. This measure requires annual assessments of Iran’s oil exports by the Biden administration. Iran produces about 3 million barrels per day (b/d) and is expected to increase this by 280,000 b/d this year. Most of Iran’s oil exports, estimated at 1.3-1.6 million b/d, go to China, often sold below market prices to small refineries that are difficult to sanction. Analyst Kevin Book estimates that if new sanctions are fully enforced, they could remove 60% of Iranian crude from the market, potentially raising global oil prices by $8.40 per barrel. However, President Biden could use discretionary waivers to prevent price spikes, especially considering the upcoming presidential election.

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